In the world of entrepreneurship, Black Americans have been historically underrepresented. One of the largest factors holding back Black-owned businesses is access to financial capital: In the first half of 2021, just 1.2% of total U.S. venture capital went to Black entrepreneurs. Historical research shows that Black-owned non-employer businesses are far less likely to receive financing than white-owned firms, and Black entrepreneurs are about three times as likely to have growth and profitability hindered by a lack of financial capital.
Knowing that obstacles still exist, both public and private organizations have worked to boost funding opportunities for Black-owned businesses. Here are thirteen government agencies, programs, and venture capital firms that can assist Black-owned businesses with getting capital.
Backstage Capital
The venture capital firm Backstage Capital is known in the tech industry for its commitment to investing in companies led by underrepresented founders including people of color and women. Backstage Capital founder and managing partner Arlan Hamilton inspirationally started the firm after experiencing homelessness and has convinced business all-stars like Marc Andreessen and Chris Sacca to invest in the fund.
To date, the firm has invested more than $7 million in 200+ companies led by underrepresented founders. Additionally, the firm recently announced a strategic partnership with KingsCrowd to launch Flex Fund II: a $3 million fund that will bring new startups into the Backstage portfolio.
Community Development Financial Institutions Fund
The Community Development Financial Institutions (CDFI) Fund, part of the U.S. Treasury Department, plays a vital role to help lesser-served U.S. business owners by increasing access to capital. Many Black-owned businesses have been helped by CDFIs because these institutions specifically “provide loans, investments, financial services and technical assistance to underserved populations and communities.” On top of this, the CDFI Fund offers tax credits to spur investment. Business owners can search for local financial institutions that have received money from the CDFI Fund and that, in turn, should be able to provide tailored assistance.
Founders First Capital Partners
The Founders First Capital Partners offers a unique take on funding with “revenue-based investment” for service-based companies led by minority, veteran, or women founders. The organization has a flexible payback model where payments are determined from cash flow instead of being a set amount each month. On top of investments, the firm also has business accelerator programs and a learning platform that can help business owners.
Accolade Partners
Accolade Partners is an alternative asset platform that specializes in technology and healthcare-focused venture capital and growth equity fund investments. In 2019, Accolade launched its first fund to build a portfolio of managers from historically underrepresented groups across venture capital and growth equity. As of May 2021, Accolade Partners raised $200 million to invest in funds started by women and minorities.
Grants.gov
The website Grants.gov offers a centralized location to learn about and apply for federal grant opportunities from more than 20 agencies. These “grant-making agencies” award more than $500 billion annually to businesses of all types. So, no matter the background or type of company you have, there may be a grant opportunity available through this portal.
Reign Ventures
Reign Ventures is a venture capital fund that focuses on seed and Series A investment opportunities at companies led by women and minority-led startups. Reign invests in technology and tech-enabled startups with high-potential founders. The fund has backed successful companies like Appy Couple, a wedding planning app, and the fashion rental platform Villageluxe.
Harlem Capital Partners
New York City-based Harlem Capital Partners makes initial investments of $750k to $1.5mm in U.S. seed rounds for 10%+ ownership. The firm debuted its $40 million diversity-focused venture capital fund in December 2019 with the goal of helping to invest in minority and women founders around the United States. The second fund (Fund II) closed in March 2021 at $134 million. Today, HCP has invested in 23 companies, comprised of 61% Black- or Latino-led companies and 43% women-only-led companies. HCP reports that the fund is still actively investing with a target of five more initial investments.
Brands including American Express, Optimum, Shopify, Stanley Black & Decker, the National Black Chamber of Commerce, National Business League, and the U.S. Chamber of Commerce Foundation have joined together in the Coalition to Back Black Businesses to empower Black-owned businesses.
IFundWomen of Color
IFundWomen is a marketplace for women-owned businesses and those who wish to support them with access to capital, networking opportunities, and coaching and mentorship. IFundWomen of Color, a partnership with Caress and American Express, offers access to debt-free capital through crowdfunding and business grants, as well as business and fundraising coaching, networking, and other resources to female entrepreneurs of color. Twice a year, the IFWOC offers $5,000 grants to 60 businesses, plus an accelerator program to help get started.
NBMBAA Scale-Up Pitch Challenge
Run by the National Black MBA Association, the Scale-Up Pitch Challenge is a pitch competition inviting participants to share their business ideas with early-stage investors and venture capitalists. Winners receive a $50,000 grand prize, with additional top prizes for second place and third place as well as a People’s Choice Award. The challenge offers great networking and exposure to funders in addition to the winning investment.
The Coalition to Back Black Businesses
Brands including American Express, Optimum, Shopify, Stanley Black & Decker, the National Black Chamber of Commerce, National Business League, and the U.S. Chamber of Commerce Foundation have joined together in the Coalition to Back Black Businesses to empower Black-owned businesses. The Coalition will offer $14 million in minority grants, resources, and training through 2023, with an eye toward helping businesses hit especially hard during the pandemic recover.
Kapor Capital
Oakland-based venture capital firm Kapor Capital prides itself on its commitment to help diverse entrepreneurs, as “founding teams from underrepresented backgrounds provide a competitive edge.” The company’s current portfolio has 62% of its investments going to companies with “a founder who identifies as a woman and/or an underrepresented person of color.”
Minority Business Development Agency
The Minority Business Development Agency (MBDA), an agency of the U.S. Department of Commerce since 1969, works to promote the growth of minority-owned businesses. One aspect of their work includes providing resources about grants and loans. Black business owners looking for guidance on local funding opportunities can do so at one of the MBDA’s Minority Business Centers, which are located in major metropolitan areas all over the country.
Small Business Administration (SBA)
The Small Business Administration (SBA) provides important resources to small businesses of all kinds and has multiple programs that can help Black-owned businesses. The SBA’s Lender Match tool helps connect small businesses with SBA-approved CDFIs (read more about them above) and small lenders that can provide a personalized touch. Notably, the SBA also has two federal contacting programs that may be relevant to Black-owned businesses — the 8(a) Business Development program and the HUBZone program.
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